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ACCOMPANYING  THE  MEMORIAL, 


OF    THE 


President  of  the  Wilmington  and  Raleigh 
Rail  Road  Company, 


FOR 


Jin  extension  of  credit  on  the  Bonds  endorsed 


iby  the  State. 


RALEIGH: 

W.  R.  GALES — Press  of  the  Raleigh  Register. 

1840. 


Digitized  by  the  Internet  Archive 

in  2012  with  funding  from 

University  of  North  Carolina  at  Chapel  Hil 


http://www.archive.org/details/planaccompanyingOOwilm 


<< 


WILMINGTON  AND  RALEIGH 


RAIL    ROAD    COMPANY, 


The  Debt  to  which  the  State  is  security  at  present, 
$250,000,  viz : 

Due  to  the  Public  Treasury,  $50,000 

"  Literary  Board,  50,000 

4t  Individuals,  150,000 


$250,000 


Is  there  any  scheme  by  which  the  State  may  be  re- 
lieved, and  yet  enjoy  the  reasonable  prospects  of  reali- 
zing something  from  the  6000  shares  of  Stock  held  in  the 
Company  ? 

ANSWER. 

The  Income  of  the  Company  is  more  than  sufficient  to 
pay  the  interest  upon  this  debt.  It  has  been  sufficient 
for  several  years,  to  pay  not  only  the  interest  on  this 
debt,  but  upon  their  other  debts  also,  and  still  leave  a 
surplus  to  apply  in  part  to  the  extinguishment  of  the 
principal  of  their  other  debts.  Hereafter,  this  may  be 
done  with  more  certainty  and  system,  if  it  be  true  that 
their  floating  debt  has  been  paid  off,  and  now  the  whole 
debt  of  the  corporation  is  a  permanent  one  ;  the  princi- 


pal  of  which  is  not  demanclable  for  many  years,  and  the 
interest  paid  by  the  profits  of  the  Road. 

The  Mortgage  of  the  Road  is  ample  security  for  this 
debt,  and  always  will  be  so,  for  a  much  larger  amount. 
If  the  Road  were  stopped  and  the  corporation  dissolved, 
the  property  and  materials  alone  would  pay  the  debt  : 
so  that  a  foreclosure  of  the  Mortgage  and  sale  of  the 
Road,  would  either  pass  the  Road  to  a  few  capitalists  for 
a  small  part  of  its  value,  and  destroy  the  Stock  owned 
in  it  by  the  State,  or  the  State  would  have  to  buy  it  by 
bidding  more  than  the  debt,  which  is  against  public  opin- 
ion, if  not  against  the  public  weal.  Besides,  if  the  State 
bought  the  Road  the  debt  would  remain,  and  North  Car- 
olina would  have  to  borrow  the  amount  of  her  purchase. 

There  are  two  capital  mistakes  in  the  Acts  heretofore 
passed  for  lending  the  credit  of  the  State  to  this  and 
other  corporations  :  1st.  No  part  of  the  loan  was  laid 
aside  for  accumulation  to  sink  the  principal  debt.  2nd. 
No  provision  was  introduced  in  the  Mortgage  for  selling 
without  a  suit,  nor  for  foreclosing,  until  after  the  debt 
had  become  due  to  the  creditors,  and  the  State  had  been 
obliged  to  provide  ways  and  means  to  pay  the  debt. 
Fortunatety,  it  is  practicable  to  correct  this  with  the  cor- 
poration, by  extending  the  credit  upon  new  terms  ;  and 
the  debt  is  so  much  below  the  value  of  the  Road,  as  to 
make  it  desirable  to  do  that  simply  as  a  relief  to  the 
State  finances.  It  will  not  be  considered  an  objection  to 
new  Legislation,  that  the  State,  by  adding  fresh  indem- 
nity for  the  public  interest,  happens  to  benefit  her  citi- 
zens also.  Thus  i  In  substitution  of  the  above  loan  of 
$250,000,  (at  this  time  outstanding)  let  the  Company  be 
empowered  to  make  a  new  loan,  guaranteed  by  the  State, 
(or  let  the  State  make  the  loan  and  charge  it  to  the  Com- 
pany) for  the  sum  of  $350,000,  redeemable  after  Janua- 
ry, 1867,  bearing  interest  as  heretofore,  at  6  per  cent,  per 
annum:  Provided,  that  $250.000, part  thereof,  be  paid  to 
the  aforesaid  outstanding  debt,  whereof  the  $50,000  paid 
into  the  Treasury,  shall  be  used  by  the  Treasurer  to  ex- 


tinguish  the  Bank  Debt ;  and  provided  also,  that  the  re- 
maining 8100.000  be  paid  into  the  hands  of  a  State  Com- 
missioner, to  accumulate  as  a  sinking  fund  to  pay  off  the 
Principal  of  the  said  Loan  of  $350,000  in  1867,  or  after 
it.  The  Rail  Road  Company  will  in  that  case,  pay  out 
of  the  profits  of  the  Road  semi-annually,  the  interest, 
(i.  e.  $21,000  per  year)  and  this  it  can  do  to  a  reasona- 
ble certainty.  The  sinking  fund  would  accumulate  be- 
fore January,  1867,  to  $321,128  SI.  If  the  loan  is  extend- 
ed to  1869,  the  $100,000  would  sink  the  whole  debt,  and 
some  $80,000  over.     [See  calculations  on  last  page.] 

This  does  not  increase  the  liability  of  the  State  for 
the  Company.  The  additional  $100,000  is  to  be  paid  to 
a,  State  Commissioner,  to  sink  the  principal  ;  and  in  fact, 
it  will  be  obliging  the  Company  to  use  their  present  cre- 
dit to  provide  a  fund  to  discharge  this  debt.  There  is 
no  better  way  of  using  a  part  of  the  income  of  a  Rail 
Road  to  discharge  a  debt,  than  this — none  so  safe  to  the 
guarantor,  provided  he  himself  is  to  keep  the  sinking 
fund.     These  results  are  as  certain  as  mathematics. 

2d.  The  mortgage  taken  upon  this  loan  to  secure  the 
State,  must  authorize  a  foreclosure  and  sale  for  the  pay- 
ment of  the  whole  debt  into  the  Public  Treasury — not 
merely  upon  default  in  paying  said  debt  or  interest,  but 
at  any  time  when  the  General  Assembly  shall  direct  it, 
provided  the  Company  shall  have  a  year's  notice.  But 
upon  a  declared  pledge  that  the  General  Assembly  will 
not  order  the  foreclosure,  unless  there  should  be  in  their 
opinion  a  reasonable  probability  of  default,  or  unless 
there  has  been  a  failure  in  the  Company  to  pay  the  in- 
terest on  said  debt  of  $350,000  ;  and  in  this  latter  case, 
no  notice  should  be  required,  and  no  suit  required  to  fore- 
close and  sell. 

3d.  Declare  by  the  law,  that  the  equity  of  redemption 
in  said  Road  shall  not  be  liable  to  sale  by  execution  at 
law,  so  as  to  prevent  posterior  creditors  from  imposing 
embarrassments  upon  the  State ;  and  because  North 
Carolina  should  never  permit  property  wherein  the  State 


is  a  share-holder,  to  be  sold  without  applying  to  the  Le- 
gislature as  well  as  the  Courts.  It  were  not  a  difficult 
thing  to  show  that  this  is  very  necessary  to  protect  the 
State  interest  in  this  Company :  and  this  change  alone 
would  be  worth  more  than  the  additional  risque  of  the 
guaranty  under  the  present  scheme. 

It  is  true,  that  all  this  would  be  some  aid  and  relief 
to  the  Company ;  but  independent  of  that,  it  is  wise  in 
the  State,  merely  as  a  share-holder  of  2-5ths  of  the  stock. 
What  will  be  its  operation  ?  The  stock  is  now  without 
a  price,  and  would  not  sell  at  all.  But  once  let  the  Com- 
pany be  in  a  condition  to  make  a  dividend,  and  the  ef- 
fect will  be  magical.  Even  a  small  dividend  of  one  per 
cent,  would  be  doing  a  great  deal  to  revive  the  credit 
of  this  enterprize,  and  add  $6,000  per  year  to  the  reve- 
nues of  the  State.  It  is  confidently  believed  by  the  man- 
agers of  the  Road,  that  this  would  be  the  effect  in  a  sin- 
gle year,  and  that  after  that  year  a  larger  dividend  would 
be  from  1  to  2,  and  thence  to  3,  4  and  5  per  cent. 

Perhaps  it  might  be  a  wise  precaution  to  amend  the 
charter  of  this  Rail  Road  Company,  so  as  to  tax  each 
share  of  stock  therein  12^  cents  per  year,  until  said  debt 
is  paid  off,  and  let  that  tax  go  into  the  State  Commis- 
sioner's hand,  to  increase  the  sinking  fund.  This  would 
be  a  certain  means  of  sinking  the  debt.  By  computa- 
tion, such  a  tax  would,  by  being  allowed  to  accumulate 
with  the  sinking  fund,  increase  it  about  $70,000  in  Janu- 
ary 1867.  And  if  there  should  be  a  dividend  of  only  25 
cents  on  the  share,  or  i  of  one  per  cent,  it  would  pay 
the  tax.  The  existence  of  such  a  tax  would  stimulate 
the  Company  to  practice  economy,  in  order  to  pay  this 
tax  out  of  the  profits  of  the  Rail  Road,  or  in  other  words, 
to  save  a  dividend  every  year. 

Remarks.  In  order  to  ascertain  how  far  it  is  probable 
the  Company  may  or  may  not  be  able  to  prosper  under 
this  arrangement,  look  at  their  income  and  see  what  it 
is.  If  it  will  suffice  to  pay  $21,000,  (the  interest  on  the 
$350,000,)  the  State  will  be  secure,  and  the  debt  will  be 


extinguished  by  the  sinking  fund  itself,  and  without  a  sale 
of  the  Road.  If  it  will  suffice  to  pay  the  $21,000, 
and  also  the  interest  that  will  accrue  upon  their  other 
Debts,  the  operation  will  be  still  more  secure,  as  it  must 
enhance  the  State  Stock  more  than  the  whole  sum  of 
$350,000 — perhaps  a  half  milion  of  dollars.  If  it  will 
suffice  to  do  all  this  and  pay  a  dividend,  the  credit  of  the 
enterprize  will  be  at  once  re-establishedT  and  the  State, 
by  this  extension  of  credit,  will  be  realizing  thousands 
and  hundreds  of  thousands,  both  to  the  Public  Treasury 
and  her  own  citizens,  by  increased  value  of  stock,  without 
the  cost  of  a  dollar  and  without  adding  to  her  present  lia- 
bilities for  the  Company.  Indeed,  it  is  believed,  this  plan 
(if  accepted  by  the  corporation)  will  increase  the  State's 
security  for  indemnity,  without  adding  a  cent  to  her  res- 
ponsibilities. 

This  is  not  a  question,  whether  the  State  shall  go  into 
these  liabilities.  They  are  already  incurred.  The  true 
question  is  how  shall  they  be  managed.  Were  it  a  mat- 
ter of  business  between  two  individuals,  where  one  had 
high  credit  and  the  other  had  not,  (associated  with  this 
Road  as  the  State  is  by  form  or  legislation,)  a  prudent 
man  would  not  hesitate  to  modify  the  existing  liabilities, 
&c.  after  the  manner  of  the  foregoing  suggestions  os 
something  like  it,  and  if  he  did,  the  whole  world  would 
pronounce  him  penny  wise  and  pound  foolish. 

The  State  owns  2-5  of  the  Road,  and  does  not  wish  to 
get  the  ownership  of  more  nor  to  loose  the  $600,000  a]* 
ready  invested  in  it.  If  without  any  increase  of  her  lia- 
bilities, she  can  secure  the  probability  of  adding  some  in* 
creased  value  to  the  Stock,  it  ought  to  be  done  without 
regard  to  the  individual  Stockholders,  and  refusing  to  do 
it  would  be  a  neglect  of  duty  by  the  Legislature.  The 
proposed  modification  of  her  present  suretyship  for  the 
$250,000,  will  be  no  addition  to  the  State's  risque,  for  altho' 
the  Company  borrow  $100,000  more,  the  whole  of  it  is  to 
go  into  the  hands  of  the  State,  as  a  sacred  fund,  to  accu- 
mulate and  pay  off  the  $350,000.     2d.  In  the  meanwhile, 


8 

the  Compan}r  pays  the  Interest,  so  that  the  debt  cannot 
increase  3d.  Instead  of  being  obliged  to  pay  the  debt 
and  foreclose  the  mortgage  afterwards,  as  the  present 
contract  is,  the  Legislature  will  hereafter  be  empowered 
upon  12  months  notice,  or  upon  a  default  to  pay  the  In- 
terest, to  proceed  upon  the  mortgage.  4th.  Instead  of 
leaving  the  public  interest  of  $600,000  in  the  stock  liable 
(as  it  is  now.)  to  be  divested  by  a  sale  under  execution 
for  1000  dollars,  through  process  against  the  equity  of 
redemption,  it  will,  by  this  arrangement,  no  longer  be 
liable  to  sale  and  sacrifice,  &c.  &c. ;  and  before  poste- 
rior creditors  can  thus  embarrass  the  public  interest,  the 
Legislature  will  have  to  be  consulted,  and  such  proceed- 
ings in  the  particular  case  can  be  authorized  as  may  be 
consistent  with  individual  right,  but  without  an  aban- 
donment of  the  property  or  rights  of  the  State.  These 
topics  might  be  enlarged  upon  and  explained,  but  it  will 
be  sufficient  to  allude  to  them  for  the  present. 

A  Rail  Road  richly  worth  one  million  of  dollars,  and 
yielding  a  clear  income,  sufficient  to  pay  6  per  cent,  may, 
under  our  law,  be  insolvent  and  sacrificed  for  a  debt  of 
$200,000,  so  long  as  the  law  remains  unchanged.  It 
ought  not  to  be  so.  Undeniably,  the  State  Legislature 
should  not  suffer  it  to  be  so,  when  she  owns  Stock  in  it. 
It  is  easy  to  provide  in  such  cases,  for  the  rights  of  the 
creditor,  without  abandoning  the  interest  of  the  public, 
to  the  cupidity  or  necessity,  or  fraudulent  combination  of 
individual  creditors. 

For  Example  :  Suppose  an  execution  were  issued 
against  the  Rail  Road  for  8500,  and  the  equity  of  re- 
demption sold  and  purchased  by  a  private  company,  (it 
might  be  the  private  or  individual  stockholders,)  the 
purchasers  would  hold  the  Road,  &c.  and  need  only  to 
pay  off  the  mortgage  debt  of  $250,000  to  become  owners 
free  of  all  the  other  creditors,  whose  debts  are  not  due 
and  payable  until  a  future  day,  and  the  whole  stock  of  the 
State  would  be  lost.  So  long  as  the  State  is  a  stock- 
holder, the  Legislature  ought  to  forbid  any  such  sales 


9 

by  execution.  State  property  ought  not  to  be  liable  to 
sale,  without  the  express  direction  of  the  people's  repre- 
sentatives ;  and  waiving  all  enquiry  into  the  facility  of 
preventing  such  a  law,  so  as  to  throw  the  loss  on  the 
State  alone,  by  any  fraudulent  or  unfair  arrangements, 
it  is  enough  to  remark,  that  so  long  as  matters  remain 
in  their  present  position,  and  this  law  remains  unalter- 
ed, a  few  capitalists  might  associate  themselves  together 
and  buy  the  equity  of  redemption  in  this  Road,  and  upon 
tendering  the  $250,000  in  satisfaction  of  the  State's  mort- 
gage, (it  is  understood.)  that  they  would  become  owners 
of  the  whole  property,  discharged  of  all  other  debts  and 
of  all  claim  by  the  State  or  individuals  as  stockholders. 
There  are  not  to  be  found  any  where  a  like  number  of 
individuals,  who  would  be  less  apt  to  do  an  unfair  or 
dishonorable  act,  than  the  proprietors  of  stock  in  this 
Road  would  for  the  purposes  of  gain.  But  suppose  the 
State  refuses  to  lend  reasonable  assistance  towards  pro- 
tecting her  own  interest  as  a  stockholder,  and  the  Rail 
Road  is  sold,  simply  because  North  Carolina  will  not 
agree  to  postpone  the  time  of  paying  this  debt  for  which 
the  State  is  already  a  surety — will  not  individual  pro- 
prietors thereby  be  driven  to  the  necessity  of  forming 
another  association  for  the  purchase  of  the  Road,  sooner 
than  lose  the  stock  held  by  them  as  co-partners  with  the 
State  ?  Does  not  such  a  policy  compel  them  in  self  de- 
fence to  resort  to  such  plans  as  may  be  lawful  for  the 
protection  of  their  interest  ?  And  would  it  be  wise  to 
sell  this  road  for  the  debt  of  $250,000,  when  it  is  worth 
so  much  more,  and  when  the  income  is  so  much  greater 
than  the  interest,  whilst  the  State  is  unwilling  to  buy  it 
at  its  full  value,  and  borrow  the  money  to  pay  for  it  ? 

It  is  believed  that  there  is  not  a  Rail  Road  in  the 
United  States,  and  certainly  there  is  not  one  in  the 
Southern  States,  which  would  not  be  sold  and  sacri- 
ficed, if  the  creditors  pursued  this  harsh  course  towards 
them.  They  preserve  their  credit  by  paying  the  interest 
of  their  debt,  and  uphold  the  value  of  the  stock  by  mak- 

2 


10 

ing  dividends.  In  time,  they  will  be  able  by  degrees  to 
satisfy  the  principal  of  their  debts  also.  But  withdraw 
their  credit  from  them,  and  a  debt  of  one-tenth  of  the 
value  of  the  Road  will  force  it  into  market,  and  the 
stockholders  become  forthwith  divested  of  millions,  and 
the  more  indulgent  creditors  will  lose  their  demand. 

Nothing  has  been  said  about  the  debt  due  the  Literary 
Fund,  as  it  has  been  understood  from  the  President  of 
the  Board,  that  it  was  considered  a  desirable  investment 
— that  if  the  money  was  paid  in,  it  would  have  to  be  in- 
vested elsewhere — provided  the  Legislature  should  be 
satisfied  the  security  was  sufficient,  which  consists  in  a 
mortgage  of  all  the  property  of  the  Company,  the  value 
of  which  has  been  already  shewn  to  be  ample.  But  if 
the  Legislature  should  think  otherwise,  now  is  the  time 
to  provide  for  it. 

It  may  be  asked,  why  have  the  Bonds  endorsed  by  the 
State  been  suffered  to  lie  over  and  thrown  on  the  State 
for  payment  ?  It  may  be  answered  with  perfect  sinceri- 
ty, that  the  Company,  apprehensive  of  such  a  result,  if 
their  application  could  not  be  granted  by  the  Legisla- 
ture, which  was  for  an  endorsement  of  $400,000,  the  a- 
mount  of  the  indebtedness  of  the  Company  at  that  time, 
not  provided  for,  on  long  credit.  The  Legislature  deem- 
ed it  proper,  however,  to  grant  only  $300,000,  on  short 
credit ;  and  the  Company  was  compelled  to  accept  what 
the  Legislature  was  pleased  to  grant,  and  do  the  best 
they  could — the  time  of  payment  commencing  with  the 
following  January,  which  left  debts  unprovided  for  to 
the  amount  cf  $100,000,  due  to  contractors  and  others, 
generally  pushed  themselves,  and  were  consequently 
compelled  to  press  the  Company.  The  Company  was 
sued  in  many  directions,  and  executions  obtained  by  the 
time  the  Bonds  which  became  due  first,  in  the  year  they 
were  issued,  and  before  the  work  was  completed.  Yet, 
with  great  exertions  and  strong  solicitations  tb  many 
persons  who  held  these  executions  for  delay,  these  Bonds 
were  paid  in  preference.      The  necessities  of  the  people 


11 

were  so  great,  that  the  executions  in  the  next  year  were 
pressed  for  payment  so  pertinaciously,  that  the  Company 
was  compelled  to  pay  them,  or  suffer  the  redemptionary 
interest  sold,  which  was  frequently  threatened,  and  pro- 
bably advertised.  The  payment  of  these  debts  disabled 
the  Company  from  meeting  the  Bonds  which  became  due 
in  the  next  year,  and  by  a  succession  of  losses,  and  great 
prostration  of  the  business  of  the  Country,  they  have 
not  been  able  to  pay  any  of  these  Bonds  since,  except  by 
renewal.  The  time  of  payment  of  these  renewed  bonds 
were  made  so  short,  that  the  Company,  in  all  probabili- 
ty, will  not  be  enabled  to  pay  them,  and  therefore  pro- 
pose the  foregoing  scheme  of  a  sinking  fund  for  that  pur- 
pose. 

Fifty  thousand  dollars  are  due  on  the  first  day  of  Jan- 
uary next,  ensuing,  which  render  it  necessary  to  obtain 
the  aid  of  the  Legislature  as  early  as  possible,  to  afford 
time  for  printing  the  Bonds  and  making  sale  thereof. 

I  have  adverted  to  the  losses  of  the  Company,  which 
consist  in  the  sinking  a  Steam  Boat  at  sea,  by  coming  in 
contact  with  another  ;  and  by  the  fire  of  1843,  by  which 
the  Company  was  deprived  of  property  indispensable, 
and  has  been  replaced,  to  the  amount  of  $170,000  to 
$180,000  ;  and  in  the  mean  time,  they  have  paid  off  the 
principal  of  their  debt,  nearly  $100,000,  and  all  the  in- 
terest, which  has  placed  the  Company  in  the  situation  to 
be  within  the  power  of  the  Legislature  to  let  them  sink 
or  swim. 


Microfilmed 
SOLINET/ASERit  PROJECT 


12 


$100  COMPOUNDED. 


January  1848, 

1849, 

106 

1850, 

112  36 

1851, 

119  09 

1852, 

126  23 

1853, 

133  80 

1854, 

141  82 

1855, 

150  32 

1856, 

159  34 

1857, 

168  89 

1858, 

179  02 

1S59, 

189  76 

1860, 

201  14 

1861, 

213  20 

1862, 

225  99 

1863, 

239  55 

1864, 

253  92 

1865, 

269  15 

1866, 

2S5  29 

1S67, 

302  40 

1S6S, 

320  52 

1869, 

339  75 

1870, 

360  13 

$100 


Of  course  $100,000  will  be  in  1870,    $360,630. 

in   1866,       285,290. 
in  1867,      302,400. 


00042072112 

FOR  USE  ONLY  IN 
THE  NORTH  CAROLINA  COLLECTION 


THIS  TITLE  HAS  BEEN  MICROFILMED 


•Vo.  A-36S 


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